The Cost Conundrum Persists

A New York Timesarticle I just read suggests that a data set I used in my piece “The Cost Conundrum” has been questioned. Not so. A recent opinion piece in The New England Journal of Medicine does take issue with a particular analysis offered by the Dartmouth Atlas of Health Care. But it doesn’t dispute the Dartmouth data I drew on.

As readers may recall, my article investigated why Medicare spent markedly more for its enrollees in McAllen, Texas, than in most of the country—in 2006, the region had higher medical spending per beneficiary than anywhere except Miami. The poverty and poor health of the people in this border community proved to be part of the story. But El Paso was just as poor and unhealthy, and health care there cost half as much per Medicare enrollee (approximately seventy-five hundred dollars versus fifteen thousand dollars in 2006) while providing levels of quality that measured, if anything, higher. The patterns of Medicare spending I found showed that McAllen’s medical community and culture simply did more—more surgery, more imaging, more specialist visits, more home-nursing visits—without clear benefit. The lesson was that more is not necessarily better. And, indeed, communities with some of the best quality measures for health care have among the lowest costs in the country for their elderly Medicare patients—communities like Grand Junction, Colorado, and Rochester, Minnesota, where the Mayo Clinic is the dominant medical institution.

The article has had an impact that is still surprising. It led to numerous proposals from across the political spectrum to hold hospitals and clinicians more accountable for reducing overtreatment, undertreatment, and mistreatment of patients. Much of the data for the article came from the Dartmouth Atlas, which is an independent resource, maintained for three decades by researchers at Dartmouth College, that analyzes Medicare data in dozens of ways. Given the attention my article directed toward its work, and the financial stakes involved, its research has faced tremendous scrutiny. But none of the data used in the article has been found erroneous or wanting.

The particular topic of the New England Journal opinion piece that the Times reported on—how hospital efficiency is measured—is, as the newspaper acknowledges, arcane. But if one wishes to try to reward hospitals that provide higher quality for lower cost, one needs to be able to distinguish between high- and low-efficiency hospitals. Dartmouth researchers have come up with a way to rate hospital efficiency, including for costs in the last year of patients’ lives. In the opinion piece, Dr. Peter Bach of Memorial Sloan-Kettering argues against using the Dartmouth measures to financially reward and penalize hospitals. There is a healthy and vital debate about how best to change hospital incentives. None of this, however, calls the Dartmouth researchers’ decades of highly respected work—or their fundamental findings—into question. If anything, the debate reinforces the importance of their research.

There remains fierce disagreement about how much of the marked differences in spending between communities is the result of health differences between populations and how much is the result of differences in the care their clinicians provide to them. But it remains clear that there are substantial variations in the cost of care for people of similar health depending on which institutions they go to—and also that clinicians with the best results often have lower, not higher, costs than average.

Even if health reform disappears, these fundamental problems will not. The cost conundrum persists.

Atul Gawande, a surgeon and public-health researcher, became a New Yorker staff writer in 1998.